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Education, Misc

May 1, 2018

Finder's Fee

Word of the day

Finder's Fee

"A fee paid to someone for producing either a buyer to purchase or a seller to list property; also called a referral fee. A finder is a person who finds, interests, introduces, or brings together parties in a deal, even though the finder has no part in negotiating the terms of the transaction.

In many states, a broker can split a commission only with another real estate licensee or with a real estate broker from another state who does not participate in any of the negotiations within the state. The question sometimes arises as to whether an owner can pay a finder’s fee to an unlicensed person such as a tenant in a building for referring other prospective tenants. In accepting such a fee, the finder runs the serious risk of being classified as a real estate salesperson and found in violation of state license laws for accepting compensation without being licensed.

The federal Real Estate Settlement Procedures Act prohibits kickbacks (i.e., paying a fee or other thing of value in exchange for receiving a referral when the transaction itself involves an original federally related mortgage loan). This provision does not cover payments made for services actually rendered or performed by a finder.NOTE: How are Finder's Fees regulated in your state?"